Bloomberg News

Asia Stocks Rise as China Stimulus Tempers Europe Concern

May 29, 2012

Asian stocks rose amid speculation China will do more to boost growth in the world’s second-largest economy, tempering concern about Europe’s debt crisis. China has no intention for large-scale stimulus, the official Xinhua News reported after most markets in the region closed.

Geely Automobile Holdings Ltd. (175) led Chinese carmakers higher after BNP Paribas SA said they may benefit from government subsidies. Komatsu Ltd., a Japanese construction machinery maker that gets 14 percent of sales from China, gained 3.2 percent. Shui On Land Ltd. jumped 7.3 percent in Hong Kong after the developer controlled by billionaire Vincent Lo said it plans to spin off its Xintiandi entertainment complex unit.

The MSCI Asia Pacific Index climbed 1.2 percent to 113.63 as of 7:31 p.m. in Tokyo, after earlier falling as much as 0.6 percent. About seven stocks climbed for every two that slipped.

Chinese “leaders are already aware of the slowdown and we’re going to see measures coming through in the next few weeks,” Raymond Chan, chief Asia-Pacific investment officer at Allianz Global Investors, told Bloomberg Television. The firm oversees about $300 billion. “There’s speculation that there will be measures coming out for the auto market. Sooner or later there will be interest-rate cuts.”

The regional gauge is headed for a 9.2 percent decline this month amid signs of a deeper slowdown in China and as European leaders pressure Greece to meet bailout terms before elections next month. Concern is now growing that Spanish lenders will need more financial support to weather the crisis in the debt- stricken region.

Japan Employment

Japan’s Nikkei 225 Stock Average added 0.7 percent, reversing earlier losses after a report the nation’s jobless rate last month unexpectedly rose for the first time since January. Australia’s S&P/ASX 200 Index gained 1.1 percent. South Korea’s Kospi Index advanced 1.4 percent after the market reopened from a holiday.

Hong Kong’s Hang Seng Index (HSI) advanced 1.4 percent and China’s Shanghai Composite Index rose 1.2 percent. Taiwan’s Taiex Index gained 2.9 percent, the most since December, after the ruling party proposed easing a tax on trading gains for individual investors.

Shares rose after China’s finance ministry said it will allocate as much as 2 billion yuan ($317 million) every year to support purchases of energy-efficient cars.

China has no intention to introduce large-scale stimulus like it did during the global financial crisis in response to this year’s economic slowdown, the official Xinhua News Agency said today after markets including China, Hong Kong, Japan, Australia and Korea closed.

In Spain, Prime Minister Mariano Rajoy called for a show of force from European authorities to help fund a bailout of the nation’s third-biggest lender, BFA-Bankia. Rajoy, repeating yesterday that he wouldn’t seek a European rescue for Spain’s banks, said the European Stability Mechanism should be able to recapitalize struggling lenders directly, bypassing national governments.

‘Irreversible Project’

“Europe has to dissipate any doubts about the euro,” Rajoy told reporters in Madrid. It “must affirm that the euro is an irreversible project and act in consequence.”

“The more the crisis progresses, the worse the situation becomes,” said Peter Elston, the Singapore-based head of Asia- Pacific strategy at Aberdeen Asset Management, which oversees about $270 billion. “We have a very serious and deteriorating problem in Europe.”

Declines in equities this month dragged the average price of stocks on the MSCI Asia Pacific Index (MXAP) to 11.6 times estimated earnings yesterday, compared with a multiple of 12.6 for the S&P 500 and 10.1 for the Stoxx 600.

Futures on the Standard & Poor’s 500 Index rose 0.6 percent today. The index slid 0.2 percent in New York on May 25, paring its first weekly rally since April. Financial markets in the U.S. were closed yesterday for the Memorial Day holiday.

Automakers Jump

Geely gained 5 percent to HK$2.92 and Dongfeng Motor Group Co. climbed 2.1 percent to HK$13.76 after BNP Paribas SA that they are among automakers that may benefit from state subsidies targeted at rural motorists. The Ministry of Industry said the incentives were aimed at increasing domestic consumption to counter slower-than- expected economic growth.

Shui On Land (272) rose 7.3 percent to HK$3.08. The Shanghai- based developer has submitted a spinoff proposal to the Hong Kong bourse, Shui On said in a statement yesterday. The company didn’t say how much it plans to raise and when the listing is expected be completed.

Nippon Yusen K.K., Japan’s largest shipping line by sales, jumped 4.4 percent to 212 yen after Credit Suisse Group AG recommended buying the shares. Komatsu gained 3.2 percent to 1,952 yen.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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